The rise of the smart customer - How consumer power will change the global power and utilities business. What the sector thinks
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Noiembrie 2011 |
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ERNST & YOUNG S.R.L. |
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+40-21-310.71.93
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www.ey.com
Are you ready for a smart transformation?
Smart technologies are modernizing energy systems and bringing massive change tothe industry, consumers and competition.
How will utilities cope with the shake-up? And what must you do to get ahead andstay ahead?
Executive summary
There are worrying gaps between what consumers want from smart and what P&Us plan to give them. These gaps jeopardize the sector’s objectives for smart.
Smart technology and services are competing in a world of increasing convergence, where the lines between energy, telecommunications, technology and other industries are increasingly blurred. Consumers already have access to an interactive,on-demand digital world through their smartphones.
Do P&Us have the knowledge and skills to reach and engage with smart consumers in this converged world?
We asked P&U leaders in 12 countries what impact they thought smart consumers would have on their business, what changes and opportunities they thought would arise, and how they planned to adapt and win in new markets.
Their answers reveal a chasm between what P&Us intend to offer, and what our consumer research says people want. This has serious implications. In particular, misunderstanding consumer demand could lead P&Us to waste a vast amount of time, money and effort developing the wrong services, while missing out on a wealth of new business opportunities.
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“Misunderstanding consumer demand could lead P&Us to waste a vast amount of time, money and effort developing the wrong services, while missing out on a wealth of new business opportunities.”
Helmut Edelmann, Director Utilities, Ernst & Young
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Key findings
We found a global consensus on two key points: 1) that smart will bring about big change in the industry; and 2) that customers sit at the heart of the change. The three most highly-rated strategic objectives for smart were improving customer care, improving customerrelated business processes and creating new business.
To achieve these objectives, utilities need to win the hearts and minds of their customers. And that’s where problems arise. There are serious gaps between what P&Us think customers want from smart, and what customers actually think and feel.
These gaps could derail the huge investment P&Us are making in smart, and lead to failure.
The most fundamental gap is about the energy supplier/customer relationship. We asked P&Us how customers perceive them. Across all countries, P&Us believe they are trusted and offer good value for money. However, in the 12 countries represented in our consumer research, 75% of consumers characterize the relationship with their energy supplier as negative; the rest are indifferent. No consumer groups in any country rate the relationship as positive.
Another gap concerns what consumers want from smart. In our experience, utilities operate on the assumption that customers are passive buyers anduninterested in energy, apart from saving money. Yet our consumer research shows that the two things customers value the most about smart are making their energy use easier to understand and giving them more control over personalconsumption. We believe there is a circle of misunderstanding that has become entrenched; this must be broken if utilities are to succeed in smart.
The other significant gap concerns smart services. Some of the services P&Us plan to offer are ones that consumers would not choose to buy from their energy suppliers because they don’t trust them, or ones that consumers are not interested in. Again, this is a clash that must be resolved to avoid utilities wasting resources.
Next steps
These findings highlight a fundamental barrier to success – if P&Us can’t get customers to trust them, they cannot offer anything beyond energy supply. The outcome is that new markets created by smart will go to new entrants.
We have identified four key steps P&Us need to take as a matter of urgency:
Challenge old thinking: P&Us must work harder to earn customers’ trust, and focus on creating a strong relationship that gives them permission to enter the smart world. Previous assumptions about customer behavior must be updated based on valid data on consumer preferences and interests.
Fill skills gaps and develop one vision: P&Us rated themselves highly on technical and strategic skills, and less well on skills such as innovation and branding. All of these skills are needed to succeed in smart – and strategic, retail and implementation teams need to cooperate around a shared smart vision.
Establish new partnerships: consumers are interested in a range of smart services, but are willing to buy only energy-related services from P&Us due to limited trust. This means P&Us need to identify the right partners, let them take the lead, and learn how other sectors have handled innovation and branding successfully in times of industry transformation.
Revisit business models: P&Us must ask themselves if their current model is viable in the long term. There are three options – business as usual, improving customer orientation and a retail exit strategy. Those who want to become more customer-focused must take a company-wide approach that puts customers at the heart of thebusiness and ensures that their voices are heard.
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“P&Us can no longer afford to be engineering-led, focused solely on delivering energy down pipes and wires, with the role of the customer being simply to pay for the requisite infrastructure.”
Ben van Gils, Global P&U Leader, Ernst & Young
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Our discussions with P&U leaders in 12 countries revealed a great divide between what consumers want and what P&Us plan to give them. While consumers were positive about smart, they were negative about energy suppliers and their role in thefuture smart world.
